That is Iron Condor. Now, I have discussed this Iron Condor many times, but before this, we understood straddle and strangle. So there was a limitation there.
So when we saw straddle, we saw that the fund requirement is 1,21,000 and today I am writing a Blog on Saturday, so you will see that you can earn 9% in Nifty. In strangle, you can earn 3.2% but there is also a fund requirement of 1 lakh rupees, but here the probability of profit is more. So what we want is that our probability of profit should be more, but our margin, you see, it is 47,000 here and we can earn 5% of ours.
So weekly you can earn 7% from Nifty if you have a strategy like this. Now, earning 7% weekly, we are not saying that it will happen every week, but when the market is sideways, then you will be able to earn about 7% on your capital.
Now, if someone’s capital is more, suppose he can increase the lot size, then I talking a simple 36 lot size, then you can earn about 90,000 rupees, as per today, but your fund requirement will be 17 lakh rupees, but if you make a strangle of 36 quantities here, then it will take about 40 lakh rupees.
So your fund requirement has significantly gone down and you can earn more, so what happens in this strategy. This strategy is also a kind of strangle, but when you see strangle and see this, one more thing will be seen here. Here your loss is not unlimited. Here you are seeing the maximum, you can lose 16%but you can lose unlimited in strangle. If the market moves very fast on any side, if it increases very fast, it falls very fast, then you can have big loss, but in iron condors, your loss is protected.
You already know what is your maximum loss, although we do not have to give this maximum loss. If it ever happens that the market becomes volatile very fast in any direction, then at that time we will understand its adjustment in the coming blogs.
Now we understand iron condor, if you want to make a basic iron condor, you want to use it, you can simply go to sensible. Although what is the other way to make iron condors, you must have seen this, I will show you the example on the option chain.
You got the option chain and you simply the strike price around 20delta, here you see around20, like 18, 350, you sell it from here and you buy the 10 delta and similarly, what do you do on the put side, you sell the 20 delta and you buy the strike price around10 delta, so this also becomes your iron condor, but now what we are going to do, we will gone level up.
What we see, for example, you select the expiry of 29th of December and we are making it on Friday, so on Friday, if we are executing it, then we have to execute the iron condor and the expiry is of 29th, then what we see that the price of the spots almost 18000, now if you see 18000 price, then what will you do, I will turn on a screen recording, so that the editor can show you exactly what you have to do, so you saw that18000 is Nifty,
now we have 52, 52 weeks in your year, if we take its square root, then it will be 7.2, why is 7.2 important for you, I will tell you just now, after that you go on the internet and search India Weeks, you can do it on Google,
for example, you see15 India Weeks at that time, you divide it, the number you just got from 7.2, then you get to know a weekly volatility, that weekly volatility of Nifty is of about 2%, so Nifty can increase by 2% and decrease by 2%, so what you did now, 18000plus 2% can increase Nifty by 360 points and 18000 minus 2% can fall by 360 points,
so now you did not do anything from your mind, so according to the difference of 300points, the strike of 17650we will sell it, if we want to sell it, then you will say that Delta is not 20 here, Deltaic 15 here, see we are increasing a little safety, that is why we are selling the strike of 15 delta here, our safety is increasing because we calculated here that Nifty can go up and down by 2%, so we are selling here, I will make it36, and we sold the strike of 17650,
so it is a simple calculation that in the difference of 200 points, the strikes coming, like 650 is here, so the strike price of 450, I buy it here, similarly, 18350is here, I sell it here and in the difference of 200 points, I have sold 350 here, so 450and 550, I bought 550 here, so in the difference of 200 points, I have purchased and bought and the sell that I have done is in front of you,
I have sold650 and 350 options, 18350on the call side and 17650 on the put side, although Delta is not neutral here, our focusing iron condor should be that our delta is neutral, if it is neutral, then you will understand what is the importance of neutral, we will understand this later, so if you had made iron condor on 23rd of December, then the max profit here could have been of 73000 and the max loss here could have been of 286000,
so if you made there, then we see how much money would have been made, if the market is in this range, then you will be profitable, if it goes here or here in this range, then you will have a loss, next day you see, here try to show you, look at this, you would have been profiting of 21000 rupees, the next day you would have been profiting of 38000,
next day you see you would have been profiting of 71000 on 28th and on the day of expiry on 29th, you have profited of 71000 in the morning, the max profit is of 73000, so I will show you 30 minutes ahead that you have reached up to 72000, the market is within your range, you will remember the last expiry of 29th, the last hour, there was a movement,
so you will see, even after the movement, you will get maximum profit, because the range you have taken, the profitable range, the market did not go out of it, so till the last, you are profiting of 72000-73000, now you see, your profit is of 73000, the market has moved slightly, see, we are talking about2.50 minutes, even after this, the market has moved, you are profiting of 73260 and if you take the last 10 minutes, the market is closed within your range, you have profited of 73350rupees, which was your max profit,
so what is in Iron Condor strategy, you know how much profit you have, you know how much loss you have, you know how much break even you have, the problem is that the market is sideways, so Iron Condors make good profit for you, if the market is not sideways, it is trending, then in the trending market, you do not get much profit in Iron Condors, here the Iron Condor we have made, we are talking about weekly Condors, see we are talking about weekly Condors, that you assume that you want to make it sensible, so that you can execute it and if you want.
you can change the strikes according to your calculation, so this is the range of a week, but if you change the expiry, you will go to the expiry of next month, then you will see in Iron Condor, you will get more profits, you can definitely increase your range, you can have more profits, but the market should be within your range,
now you must have understood the concept that how Iron Condors work, the only thing is that Iron Condors Isa very good strategy when the market is sideways, but if it starts trending, then how will you adjust Iron Condors, after that what you have to do, after that you have to do Brahmastra, because in the trending market, nothing is better than Brahmastra, but for the sideways market, nothing is better than Iron Condors .
